Govt allocates Rs. 48,042 crore in three key schemes to compete with China, Vietnam in electronics manufacturing

NEW DELHI: The Cabinet has approved three key schemes to incentivise electronics and components manufacturing exports and production in the country. The three schemes, with a total outlay of Rs. 48,042.25 crore, are expected to lead to investment to the tune of Rs. 20 lakh crore and employment opportunities for 25 lakh people over the next 5-6 years, union minister for electronics and IT, Ravi Shankar Prasad said during the briefing.

"These schemes will play a big role in realising the dream of $1 trillion digital economy by 2025," said Prasad.

Close to Rs. 40,995 crore has been approved for five years under the Production Linked Incentive (PLI) scheme which will give 4-6% incentive to companies on their manufacturing out of India, be it for exports or domestic consumption. Another scheme with an outlay of Rs. 3,385 crore will give 25% subsidy on capital incentive and will promote component and semi conductor manufacturing. A third scheme to promote mega electronic clusters has also been announced.

"These schemes will lead to Rs. 10 lakh crore of manufacturing by 2025 and creation of 20 lakh jobs," said Prasad. He added that it will also help in reducing the country's dependance on imports since electronics imports is the second largest in the country.

The PLI will help wooing the large companies come to India, invest here in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units. They will get 4-6% incentive on the final manufacturing. The scheme will also help in creating 2-4 "champion indian companies," Prasad said.

The Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS) will provide financial incentive of 25% on capital expenditure for the select electronic goods that comprise downstream value chain of electronic products, i.e., electronic components, semiconductor/ display fabrication units, ATMP units, etc. The scheme will also be applicable to expansion of capacity modernization and diversification of existing units along with investments in new units.

The . Electronics Manufacturing Clusters (EMC) 2.0 which was a key ask of the industry will act as a pull for large companies to come to India bringing along their entire components manufacturing ecosystem. The scheme will provide financial assistance upto 50% of the project cost subject to ceiling of Rs.70 crore per 100 acres of land and For Common Facility Centre (CFC), financial assistance of 75% of the project cost subject to a ceiling of Rs.75 crore will be provided. The government has earmarked a budgetary outlay of Rs. 3,762.25 crore for this scheme over a period of 8 years.

Prasad said that the schemes are expected to have a combined impact of overcoming around 6%-10% of disability in electronics manufacturing and bring the country on par with other competing nations such as Vietnam.